Digital banking customers to grow

Source:Xinhua Published: 2014-1-23 23:18:01

The number of digital banking consumers in Asia would reach 1.7 billion by 2020, with China, India, and ASEAN seeing the biggest gains, said a new report released Thursday by global management consultants Mc­Kinsey & Company.

The report showed that in China, the number of digital banking consumers will leap from 380 million in 2012 to 900 million in 2020.

McKinsey's research found that Asian consumers are becoming increasingly comfortable with using mobile and Internet channels for banking services, with their use increa­sing on average more than 35 percent in the past three years, according to Kenny Lam, head of Asia Retail Banking Practice at McKinsey.

"Our research also observed a drop in branch usage of 27 percent across Asia. At a few leading banks, nearly 20 percent of key product purchases are now completed online," Lam told reporters on Thursday.

The report showed that over the next three years, the combined impact of digital banking initiatives could boost net profits by up to 35-45 percent for banks that learn to get it right. Meanwhile, up to 20-30 percent of net profits are at risk in Asian banks that are unable to leverage digital technologies.

Banks in mature Asian markets have invested in refining their operating models over the past few years, yet much remains to be done to follow through on the promise of a fully digitized customer experience. Only 5 percent of processes are fully automated and only 25 percent of processes are technology enabled, in the banks examined in McKinsey's report.

Asian banks that fail to heed the call of the digital consumer may also lose market share to unconventional players, the report said, noting that banking customers in most Asian markets are young, comfortable with mobile technologies, and less dependent on conventional banking infrastructure.

Alipay, for instance, a leading Chinese third-party online payment provider, served more than 800 million registered users as of July 2013.

"Asian banks still lag behind their counterparts in the rest of the world when it comes to digital banking services," Lam said. "There's enormous upside opportunity for banks that can figure it out."